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Review Case Study (within the READ section): Chapter. 11 - Real Choices at Target

400 WORDS PER QUESTION. 3 APA CITED SOURCES. Please be sure to support your ideas accordingly, using proper APA formatting through in-text citations and a full reference list at the end. NO PLAGERISM!!!

1.Discuss the key points of the case related to Target’s supply chain. What decision is Target’s management facing?

2.Discuss the type of distribution strategy that Target most often practices. What does this type of distribution strategy entail and why is it an effective strategy for Target?

3. An issue that can negatively impact Target’s business success is inventory stockouts. What is a stockout? Discuss least two (2) methods that Target’s management could implement to prevent stockouts. What do these methods entail and why did you select them?


For this part there needs to be 250 words. 3 APA CITED REFERENCES. NO PLAGERISM!!!

- Discuss the roles of PR within an organization.

- Select a company and research it paying particular attention to its public relations efforts.

- Identify and describe some of the proactive PR that has been done for the company to establish and maintain a favorable image.

- Then identify and describe the company’s crisis management PR.

- How have their PR specialists tried to put a good face on bad news?

Be specific and provide EXAMPLES. Include scholarly research on the PR, proactive PR, and crisis management PR.

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Chapter 9 Product II: Product Strategy, Branding, and Product Management MARKETING THROUGHOUT THE PRODUCT LIFE CYCLE p. 271 Objective Outline 9.1 Discuss the different product objectives and strategies a firm may choose. pp. 264–270 9.3 Explain how branding and packaging strategies contribV ute to product identity. pp. 274–283 I PRODUCT PLANNING: DEVELOP PRODUCT OBJECTIVES AND PRODUCT STRATEGY p. 264 9.2 Understand how firms manage products throughout the product life cycle. pp. 271–274 Becky BRANDING ANDC PACKAGING: CREATE PRODUCT IDENTITY p. 274 K E R S Frankiewicz , 9.4 Describe how marketers structure organizations for new and existing product management. pp. 284–285 ORGANIZE FOR EFFECTIVE PRODUCT MANAGEMENT p. 284 Check out the Chapter 9 Study Map on page 285. Courtesy of Becky Frankiewicz, PepsiCo, Inc. A Decision Maker at the Quaker Oats Company A N D R E W Becky Frankiewicz is the Senior Vice President and General Manager of Quaker Foods North America, a subsidiary of PepsiCo, Inc., an important better-for-you brand within the company’s global growth strategy. Becky began her PepsiCo career in finance working in the strategy/mergers and acquisitions practice for Frito Lay. Since then she’s held a variety of roles across marketing and innovation for Quaker Foods North America and the Global Nutrition Group. Most recently Becky spent two years operating in a sales capacity, leading and developing PepsiCo’s Costco business globally across nine countries. As part of this role, she was responsible for setting the long-term strategic plan, delivering the annual operating plan, and managing the overall relationship with the customer. In October 2014, Becky rejoined the Quaker Foods North America team as general manager, a role that allows her to serve as the keeper of a loved and trusted health and wellness brand, steeped in nearly 140 years of heritage. Before PepsiCo, Becky worked in strategic consulting with Deloitte and Andersen Consulting and held a series of management and leadership roles at Procter & Gamble. She holds a BBA in Marketing from the University of Texas and an MBA in Finance from the University of Texas San Antonio. Passionate about the development of female leaders in business, Becky is the executive sponsor of PepsiCo’s Women’s Inclusion Network and sits on the Board of Directors for Girls in the Game, a nonprofit committed to developing leadership in at-risk teen girls. Becky resides in the suburbs of Chicago with her husband and three daughters. What I do when I’m not working: I have three beautiful daughters—Parker (15), Payton (13), and Piper (11)—who keep me quite busy. They are all very strong students in school and all three dance competitively outside of school. They are my “why” to borrow Simon Sinek’s term. I want to empower them to be and do whatever they choose in life and show them that you can have a family and achieve your career goals. My husband, Marek, and I were college sweethearts and have been married for 20 years! He’s a keeper. First job out of school: I worked in retail sales for Procter & Gamble going door to door to grocery stores. It was a critical experience as it taught me what retail managers’ value and gave a bit of insight into how consumers make decisions. I say a bit of insight—as it’s the reason I’ve stayed in this business. With all of the tools we have today in marketing, there is not a reliable tool to predict consumer behavior. It’s the beauty of humanity; we are all different in certain ways and we continue to change making us ultimately unpredictable! Business book I’m reading now: The Road to Character by David Brooks 262 Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 Becky’s Info 1 6 5 4 T S My hero: My mom. She worked outside the home at a time very few women did and although I intellectually know she worked long hours, I never felt her absence at home. She taught me very early that I could do whatever I wanted in life—and I believed her. She is truly remarkable!   *  #         this motto with me, and I’ve adopted it. My motto to live by: What drives me: Listen for what you do not want to hear.        @    for you to get the “real” story so you have My family, helping consumers live more balanced lives, feeling like I’m on the path for my purpose. Here’s my problem… Real People, Real Choices V Quaker is one of the oldest registered trademarks in the  I United States. The original trademark was filed in 1877, so Continue on the current path with the same brand the brand has a rich history. We know (and love) that for many people, Quaker C positioning and target through the master brand apis synonymous with oatmeal. It’s what they grew up eating, continue to eat in K proach. This would be the safest route to maintain the equity of the their adulthood, and in many cases feed their own children. brand, and we could confidently estimate ROI based on the brand’s Through a commitment to innovation, over the last several decades E Option performance in prior years. In addition, sticking with the master brand the Quaker brand has been able to expand its offerings beyond traditional R approach would be the most economical from a media buy perspective because it reoatmeal to cross into many different types of products and sub-brands. This includes things like granola bars (e.g., the Quaker Chewy sub-brand) as well as S quired a lower spend on each portion of the portfolio, and we hoped the singular Quaker message would have a halo effect that equally benefitted all of our products. ready-to-eat cereals (e.g., the Quaker Oatmeal Squares or Quaker Life Cereal Explore a new positioning and target through a sub-brands). Although oatmeal continues to—and will always—be our heart , consumer deep dive that could halo across all prodand soul, we actually make many different types of wholesome and delicious ucts yet be customized with different reasons to products for people to enjoy. believe (meaning proof that the brand delivers the Further, although Quaker has always thought of our core consumer as A benefits that it promises) for each. At a minimum, this moms (who act as the primary grocery shopper for their families), the brand has N Option option would benefit the business because the brand management team would at times had to evolve how we position ourselves given that consumers and D gain a deeper understanding of the benefits consumers are looking for in the their preferences are constantly changing, especially when it comes to food. When I joined the Quaker business in October 2014, one of the first R current marketplace. Additionally, these insights would help improve our brand positioning with credible reasons to believe, which should accelerate growth. things I did was examine our marketing approach. For the last several years, Quaker had been operating under what is called a “master brand strategy,” in E On the other hand, developing a new positioning strategy would be less effithat it applied a singular brand position, message, and look and feel across all Wcient compared to the master brand approach because we would have to invest additional marketing funds for each category or sub-brand across the portfolio. Quaker products and sub-brands. It also targeted the same, universal audience Therefore, we would likely have to prioritize how we spent our dollars across (in our case, women ages 25–44, with 2 + school-aged kids). This strategy came to life as a campaign called “Quaker Up,” and carried the message that 1 products. Plus, there is the risk that the change in positioning may not resonate Quaker could help fuel families by delivering good energy through the power with consumers of a well-established, mature brand like Quaker. 6 of whole grain oats. Now put yourself in Becky’s shoes: Which option would you choose, and Although our initial intent was to continue operating under this type of 5 why? master brand strategy, we had to pause given that we were not seeing the halo we hoped for across our full portfolio. The hypothesis was that communi- 4 cating a singular benefit was potentially a lowest common denominator across T You Choose our full business, but it was clear that some products were benefiting from the Which Option would you choose, and why? S singular message more than others. Option 1 Option 2 The key question became clear: would using the Quaker Up/energy message across all products and sub-brands drive return on investment (ROI) as See what option Becky chose in MyMarketingLab™. effectively and efficiently as having a separate message for each product? ISBN 1-323-75008-8 Becky considered her Options 1 2 MyMarketingLab™ Improve Your Grade! Over 10 million students improved their results using the Pearson MyLabs. Visit mymktlab.com for simulations, tutorials, and end-of-chapter problems. 263 Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. 264 PA RT THR E E | DE V E L O P T HE VAL U E P R OPO SI TI O N F O R TH E C U STO M ER Chapter 9 9.1 OBJECTIVE Discuss the different product objectives and strategies a firm may choose. Product Planning: Develop Product Objectives and Product Strategy What makes one product fail and another succeed? It’s worth reemphasizing what you learned in Chapter 3: Firms that plan well succeed. Product planning plays a big role in the firm’s market planning. And among the famous four Ps of the marketing mix, each P is not created (pp. 264–270) equal—that is, the best pricing, promotion, and physical distribution strategies cannot overcome fundamental problems with the product over the long run! Hence, product planning takes on special significance in marketing. V the product specify how the firm expects to develop a value Strategies outlined within proposition that will meetI marketing objectives. Product planning is guided by the conproduct management tinual process of product management, which is the systematic and usually team-based C The systematic and usually team-based approach to coordinating all aspects of a product’s strategy development and execution. In approach to coordinating all aspects of a some companies, productK management is sometimes also called brand management, and the product’s strategy development and execution. terms refer to essentially the E same thing. The organization members that coordinate these processes are called product managers or brand managers. We discuss the role of these indiR viduals in more detail later in the chapter. S As more and more competitors enter the global marketplace and as technology moves forward at an ever-increasing , pace, firms create products that grow, mature, and then decline at faster and faster speeds. This acceleration underscores that smart product management strategies are more critical than ever. Marketers just don’t have the luxury of trying A work, and then trying the next thing; they have to multione thing, finding out it doesn’t task when it comes to product N management! In Chapter 8, we talked about how marketers think about products—both core D how companies develop and introduce new products. In and augmented—and about this chapter, we finish the Rproduct part of the story as we see how companies manage products, and then we examine the steps in product planning, shown in Figure 9.1. E These steps include developing product objectives and the related strategies required W products as they evolve from “newbies” to tried-and-true to successfully market favorites—and in some cases finding new markets for these favorites. Next, we Figure 9.1 Process | Steps to Manage discuss branding and packaging, two of the more important tactical decisions 1 Products product planners make. Finally, we examine how firms organize for effective 6 Let’s start with an overview of how firms develop productEffective product strategies come from a series of product management. orderly steps. related objectives. 5 Develop Product Objectives • For individual products •For product lines and mixes Design Product Strategies Make Tactical Product Decisions Organize for Product Management want to accomplish? Clearly stated product objectives provide focus and direction. They should support the broader marketing objectives of the business unit in addition to being consistent with the firm’s overall mission. For example, the objectives of the firm may focus on return on investment (ROI). Marketing objectives then may concentrate on building market share or the unit or dollar sales volume necessary to attain that ROI. Product objectives need to specify how product decisions will contribute to reaching a desired market share or level of sales. To be effective, product-related objectives must be measurable, clear, and unambiguous—and feasible. Also, they must indicate a specific time frame. Consider, for Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 • Product branding •Packaging and labeling design 4 T When marketers develop product strategies, they make decisions about product benefits, features, S styling, branding, labeling, and packaging. But what do they Getting Product Objectives Right C H AP T E R 9 | P R O D UC T I I : P R O D U C T STRATEG Y, BRA N D I N G , A N D PRO D U C T M A N A GEMENT example, how Amy’s, a popular organic and health-conscious frozen ethnic entrée manufacturer, might state its product objectives: š “In the upcoming fiscal year, reduce the fat and calorie content of our products by 15 percent to satisfy consumers’ health concerns.” š “Introduce three new products this quarter to the product line to take advantage of increased consumer interest in Mexican foods.” š “During the coming fiscal year, improve the chicken entrées to the extent that consumers will rate them better tasting than the competition.” Planners must keep in touch with their customers so that their objectives accurately respond to their needs. In Chapter 2, we introduced you to the idea of competitive intelligence, and an up-to-date knowledge of competitive product innovations is important to develop product objectives. Above all, these objectives should consider the long-term implications of product deciV sions. Planners who sacrifice the long-term health of the firm to reach short-term sales or finanI cial goals choose a risky course. Product planners may focus on one or more individual products CNext, we briefly examine at a time, or they may look at a group of product offerings as a whole. both of these approaches. We also look at one important product objective: K product quality. E R Everybody loves the MINI Cooper. But it wasn’t just luck or happenstance that turned this S product into a global sensation. Just how do you launch a new car that’s only 142 inches , BMW succeeded by long and makes people laugh when they see it? Its parent company ISBN 1-323-75008-8 Objectives and Strategies for Individual Products deliberately but gently poking fun at the MINI Cooper’s small size. The original launch of the MINI Cooper included bolting the MINI onto the top of a Ford Excursion with a sign reading, “What are you doing for fun this weekend?” BMWA also mocked up full-size MINIs to look like coin-operated kiddie rides you find outside grocery N stores with a sign proclaiming, “Rides $16,850. Quarters only.” The advertising generated buzz in the 20- to D 34-year-old target market, and today the MINI is no joke. R As a smaller brand, the MINI never had a huge advertising budget—in fact it was the first launch of a new car in modern times that didn’t include TVEadvertising. Instead, the MINI launched with print, outdoor billboards, and online ads. It has an active and ongoing W social media presence. The objective wasn’t a traditional heavy car launch; rather, BMW envisioned a “discovery process” by which target consumers would find out about the brand on their own and fall in love with it. Ads promoted “motoring” instead 1 of driving, and magazine inserts included MINI-shaped air fresheners and pullout games. Wired magazine even 6 ran a cardboard foldout of the MINI suggesting that readers assemble and drive it around their desks making “putt-putt” noises. Playboy came up with the5idea of a six-page MINI “centerfold” complete with the car’s vital statistics and hobbies. By 4 the end of its first year on the market, the MINI was rated the second-most memorable new product of the year! T Like the MINI, product strategies often focus on a single new product. (As an interestS quarters in the MINI’s ing sidebar, enough customers have complained about the cramped backseat—it is, after all, a “mini”—that BMW acquiesced and introduced a “larger MINI.” Now that’s an oxymoron—something like a “jumbo shrimp”!)1 Strategies for individual products may be quite different, depending on the situation: new products, regional products, mature products, or other differences. For new products, not surprisingly, the objectives relate heavily to producing a very successful introduction. After a firm experiences success with a product in a local or regional market, it may decide to introduce it nationally. Trader Joe’s, for example, opened its doors in Pasadena, California, in 1967 (and it’s still there today). But it wasn’t until 1993 that the brand moved outside of California, heading east to Phoenix, Arizona. Today, you can find Trader Joe’s throughout most of the country, though you won’t yet find it in all 50 states.2 Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. 265 266 PA RT THR E E | DE V E L O P T HE VAL U E P R OPO SI TI O N F O R TH E C U STO M ER For mature products like 80-year-old Lay’s potato chips, product objectives may be focused on how to leverage the brand to develop new varieties of the product that appeal to changing consumer tastes. Today there are four different main categories of Lay’s potato chips (Traditional Lay’s, Wavy, Kettle Cooked, and Stax). Each of these categories has a variety of different flavors that range from the more traditional “Barbeque” to the more adventurous “Kettle Cooked Wasabi Ginger.”3 Lay’s involves its consumers in the process of developing new flavors through its “Do Us A Flavor” contest in which anyone is allowed to submit a flavor idea and the public is able to vote on their favorite flavors, with the ultimate winner taking home a cool $1 million or 1 percent of net sales through a set time frame, whichever is higher). The winner also gets the satisfaction of knowing that this winning flavor actually will be taken to market as the newest Lay’s potato chip flavor. In 2015 the winning submission was (drumroll please): Biscuits and Gravy, proving that creativity and fun have a place in keeping even an 80-plus-year-old brand alive.4 product line A firm’s total product offering designed to satisfy a single need or desire of target customers. V I Objectives and Strategies for Multiple Products C Although a small firm might get away with a focus on one product, larger firms often sell a set of related products. This means K that strategic decisions affect two or more products simultaneously. The firm must think in terms of its entire portfolio of products. As Figure 9.2 shows, E product planning means developing product line and product mix strategies to encompass R multiple offerings. A product line is a firm’s S total product offering to satisfy a group of target customers. For example, as we saw in Chapter 4 Campbell’s Soup offers several different brands to , ® satisfy different consumer tastes and needs. One is Campbell’s Slow Kettle soup, which is positioned as a more luxurious experience for more discerning consumers. Slow Kettle® is preservative free, features A creative combinations of ingredients, and employs a slow simmer method of cooking to draw out each soup’s unique flavor. On the other hand, N D Figure 9.2 Process | Objectives for Single and Multiple R Products Product objectives provide focus and direction for product strategies. Objectives can focus on a single product or a group of products. E W Individual Products Multiple Products Introduce new products Regional product: Introduce nationally Mature product: Increase consumer enthusiasm for the product Stretching: Adding new items to line 1 6 Product Line Extensions 5 4 T Filling: SAdding sizes or styles Product Mix Contracting a product line: Dropping items Increase width of product mix Upward Two-way Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 Downward ISBN 1-323-75008-8 C H AP T E R 9 | P R O D UC T I I : P R O D U C T STRATEG Y, BRA N D I N G , A N D PRO D U C T M A N A GEMENT Campbell’s Soup on the Go is positioned as a quick snack for those with limited time to eat. Soup on the Go features simple soups packaged in a cup that is microwavable for heating, easy to grip with one hand, and consumed by tilting the container in the same way one would do for a can of soda. The product line length is determined by the number of separate items within the same category, in Campbell’s case a total of nine brands each with multiple stock-keeping units (SKUs). An SKU is a unique identifier for each distinct product. Hence, for Campbell’s Soup on the Go, each SKU would represent a unique item within the brand, which in this case would be each of the different soup recipes sold under that brand.5 A full line strategy targets many customer segments to boost sales potential. In contrast, a limited-line strategy, with fewer product variations, can improve the firm’s image if consumers perceive it as a specialist with a clear, specific position in the market. A great example is Rolls-Royce Motor Cars, which BMW also owns (how about that—from MINI V Coopers to Rolls—quite a stable of brands!). Rolls-Royce makes expensive, handcrafted I maintained a unique cars built to each customer’s exact specifications and for decades position in the automobile industry. Every Rolls Phantom that rolls C out the factory door is 6 truly a unique work of art. K Organizations may decide to extend their product line by adding more brands or E acquired several highmodels. In recent years the fragrance company Estee Lauder has end, niche fragrance brands such as “By Kilian” and “Le Labo” Rto take advantage of 7a consumer trend toward fragrances that more closely express each wearer’s individuality. S When a firm stretches its product line, it must decide on the best direction to go. If a , an upward line stretch firm’s current product line includes middle- and lower-end items, adds new items—higher-priced entrants that claim better quality or offer more bells and whistles. Kia has been working to stretch its low-priced product line upward with A new brand-building activities and a new luxury car. To achieve that objective, in 2013 Kia launched its $66,000 luxury K900, positioning it between theNBMW 5-Series (at about $50,000) and the BMW 7-Series (at about $75,000).8 It is often challenging for a brand to D make the move from offering products in the mid-to-low priced category to offering a R high-end product, and the K900 has experienced this first hand in the few years since it was launched. Lower-than-expected sales motivated Kia to cut E the price of the Premium trim version of the car (one tier below the luxury trim version initially W launched and dis9 cussed) by $5,000 down to $55,400. Conversely, a downward line stretch augments a line when it adds items at the lower end. Here, the firm must take care not to blur the images of its 1 higher-priced, upper-end offerings. Rolex, for example, may not want to run the risk of cheapening its image with a 6 new watch line to compete with Timex or Swatch. In some cases, a firm may come to the realization that its current target market is too small. In this case, 5 the product strategy may call for a two-way stretch that adds products at both the upper and4lower ends. A filling-out strategy adds sizes or styles not previously available in a product category. T Mars Candy did this when it introduced Reese’s Minis as a knockoff of its already crazypopular full-sized product. In other cases, the best strategy maySbe to contract—meaning reduce the size of a product line, particularly when some of the items are not profitable and the complexity of managing them becomes detrimental to the company. For example, P&G agreed in 2015 to sell a number of its beauty brands and associated products to the company Coty. Included in the deal were such well-known brands as Cover Girl and Clairol. This strategic move was designed to free up company resources at P&G to focus on higher potential brands and reduce the costs and complexities associated with managing a large number of underperforming brands within the company’s brand portfolio.10 We’ve seen that there are many ways a firm can modify its product line to meet the competition or take advantage of new opportunities. To further explore these product strategy decisions, let’s stick with the P&G theme and return to the “glamorous” world of dish detergents. By the way, P&G basically invented the product management system 267 product line length Determined by the number of separate items within the same category. stock-keeping unit (SKU) A unique identifier for each distinct product. Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. 268 PA RT THR E E | DE V E L O P T HE VAL U E P R OPO SI TI O N F O R TH E C U STO M ER cannibalization The loss of sales of an existing brand when a new item in a product line or product family is introduced. product mix The total set of all products a firm offers for sale. product mix width The number of different product lines the firm produces. product quality The overall ability of the product to satisfy customer expectations. that is widely used in firms around the world, so it’s certainly fitting to focus on this giant consumer products company. What does P&G do if the objective is to increase market share? One possibility would be to expand its line of liquid dish detergents—as the company did with its move to expand Gain’s popularity from laundry soap to dishwashing liquid. If the line extension meets a perceived consumer need the company doesn’t currently address, this would be a good strategic objective. Gain brought a bevy of laundry loyalists into its new category in dishes, making for a great base of business on which to build. But whenever a manufacturer extends a product line or a product family, there is risk of cannibalization. This occurs when the new item eats up sales of an existing brand as the firm’s current customers simply switch to the new product. That may explain why P&G’s Gain dishwashing positioning is all about the unique Gain scent. For Gain Flings (basically the Gain equivalent of Tide Pods), the message to consumers is “get 50 percent more of that original Gain scent you love—it’s music to your nose!” V I Product Mix Strategies C its entire range of products. When they develop a product A firm’s product mix describes mix strategy, marketers usually K consider the product mix width, which is the number of different product lines the firm produces. If it develops several different product lines, a E firm reduces the risk of putting all its eggs in one basket. Normally, firms develop a mix of R things in common. product lines that have some Constellation Brands, San international producer and marketer of wine, beer, and spirits, recently acquired craft beer producer Ballast Point Brewing & Spirits for $1 bil, lion to add a line of craft beers to its current portfolio of beer brands. Constellation was originally more focused on wine and spirits but has been expanding its offering of beers since it acquired permission A to sell Corona and Modelo beers in 2013. For Constellation the addition of Ballast Point makes sense as it increases the types of brands and prodN ucts that it offers to meet the growing consumer demand for craft beers, a market that is expected to continue toDgrow for the foreseeable future. Some of Ballast Point’s products bring with them a loyal R following, and Constellation hopes these loyalists will ask local watering holes to sell the product. It stands to reason that Constellation also may E be able to increase sales of some of their other beer brands to establishments that currently carry Ballast PointW beers through cross selling opportunities. Strategically, the acquisition of Ballast Points has potential to increase Constellation’s product mix width in a way that adds synergies and opportunities for further 1growth.11 Constellation Brands acquired the Ballast Point craft beer brand to diversify its product mix. perform, not necessarily to some technological level of perfection. That is, for all intents and purposes, perception is reality. Product quality objectives coincide with marketing objectives for higher sales and market share and to the firm’s objectives for increased profits. In 1980, just when the economies of Germany and Japan were finally rebuilt from World War II and were threatening American markets with a flood of new products, an NBC documentary on quality titled If Japan Can Do It, Why Can’t We? fired a first salvo to the American public—and to American CEOs—to warn that American product quality was becoming inferior to Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 Courtesy of Ballast Point Brewing & Spirits 6 5Quality as a Product Objective: TQM 4and Beyond TProduct objectives often focus on product quality, which is the overall ability of the product to satisfy customer expectaStions. Quality is tied to how customers think a product will C H AP T E R 9 | 269 P R O D UC T I I : P R O D U C T STRATEG Y, BRA N D I N G , A N D PRO D U C T M A N A GEMENT Ripped from the Headlines Ethical/Sustainable Decisions in the Real World How precise must marketing messaging be about environmentally friendly or all natural products? Can we call a product “all natural” if it is made with 99 percent all natural ingredients and 1 percent artificial components? What if the ratio is 90 percent all natural ingredients and 10 percent artificial components. Would your opinion shift then? Toward the end of 2015, a class-action lawsuit was filed against the consumer packaged goods company Kimberly Clark by two plaintiffs. They claimed that they had been deceived by the labeling of Huggies “Pure and Natural” diapers and Huggies “Natural Care” wipes. Huggies marketed its “Pure and Natural” diapers as a “super-premium diaper that includes natural, organic materials and ingredients to provide gentle protection for new babies, as well as initial steps toward environmental improvements, without sacrificing performance.”12 This rather vague statement was viewed as perpetrating misperceptions about the product’s actual level of natural, organic content. The plaintiffs stated in their lawsuit that they would not have purchased either product had they known that they contained ingredients that were not naturally occurring and potentially harmful.13 So just what does a company have to deliver in the form of a product to label it as “pure,” “natural,” “green,” or “sustainable” on its packaging and emphasize these attributes in its marketing communication? And what should consumers expect of the product in terms of its ingredients ETHICS CHECK: and attributes based on such labels and Should marketers be identifications? Although the company might allowed to promote argue that nothing about the Huggies labela product to coning and messaging was technically false, it’s sumers as “green,” not hard to see how consumers might have or “natural” if they made certain assumptions about the product know that such as a result of the specific information that it claims are only emphasized in its marketing communication partially accurate? about these products. ISBN 1-323-75008-8 V I C K E R S , revolution in American other global players.14 So began the total quality management (TQM) industry. TQM is a business philosophy that calls for company-wide dedication to the development, maintenance, and continuous improvement of all aspects of the company’s operations. A Indeed, some of the world’s most admired, successful companies—top-of-industry firms such as Nordstrom, 3M, Boeing, and Coca-Cola, to name a few—endorse aN total quality focus. Product quality is one way that marketing adds value to customers. D However, TQM as an approach to doing business is far more sophisticated and impactful than simply paying R attention to products that roll off the assembly line. TQM firms promote a culture among E employees who never employees that everybody working there serves its customers—even interact with people outside the firm. In such cases, coworkers W are internal customers—other employees with whom they interact, and these employees harbor an attitude and belief that providing a high quality of service internally will ultimately have an impact 1 This internal customer on external customers’ experiences with the firm and its offerings. mind-set comprises the following four beliefs: (1) employees who6receive my work are my customers, (2) meeting the needs of employees who receive my work is critical to doing a 5 good job, (3) it is important to receive feedback from employees who receive my work, and 4 (4) I focus on the requirements of the person who receives my work. The bottom line is that TQM maximizes external customer T satisfaction by involving all employees, regardless of their function, in efforts to continually improve quality. This S results in products that perform better and more fully meet customer needs. For example, TQM firms encourage all employees, even the lowest-paid factory workers, to suggest ways to improve products—and then reward them when they come up with good ideas. TQM fired the first shot on product quality, and since then many companies around the world look to the uniform standards of the International Organization for Standardization (ISO) for quality guidelines. This Geneva-based organization developed a set of criteria to improve and standardize product quality in Europe. The ISO 9000 is a broad set of guidelines that establish voluntary standards for quality management. These guidelines ensure that an organization’s products conform to the customer’s requirements. ISO subsequently has developed a variety of other standards, including ISO 14000, which concentrates on environmental management, and ISO 22000 on food safety management and ISO 27001 on information security. Because members of the European Union and YES NO total quality management (TQM) A management philosophy that focuses on satisfying customers through empowering employees to be an active part of continuous quality improvement. internal customers Coworkers that interact who harbor the attitude and belief that all activities ultimately impact external customers. internal customer mind-set An organizational culture in which all organization members treat each other as valued customers. ISO 9000 Criteria developed by the International Organization for Standardization to regulate product quality in Europe. Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. Reprinted with permission from Timberland, a division of VF Outdoor, Inc.; John Ross, Photographer 270 PA RT THR E E | DE V E L O P T HE VAL U E P R OPO SI TI O N F O R TH E C U STO M ER other European countries prefer suppliers with ISO 9000 and ISO 14000 certification, U.S. companies must comply with these standards to be competitive there.15 One way that companies can improve quality is to use the Six Sigma method. The term Six Sigma comes from the statistical term sigma, which is a standard deviation from the mean. Six Sigma refers to six standard deviations from a normal distribution curve. In practical terms, that translates to no more than 3.4 defects per million—getting it right 99.9997 percent of the time. As you can imagine, achieving that level of quality requires a rigorous approach (try it on your term papers—even when you use spell-check!), and that’s what Six Sigma offers. The method involves a five-step process called DMAIC (define, measure, analyze, improve, and control). The company trains its employees in the method, and as in karate they progress toward V “black belt” status when they successfully complete all the levels of training. EmployeesIcan use Six Sigma processes to remove defects from services, not just products. C In these cases, a “defect” means failing to meet customer expectations. For example, hospitals use Six Sigma processes to reduce medical K errors, and airlines use the system to improve flight scheduling. It’s fineEto talk about product quality, but exactly what is it? Figure 9.3 summarizes the many aspects of product quality. In some cases, product R quality means durability. For example, athletic shoes shouldn’t develop holes S after their owner shoots hoops for a few weeks. Reliability also is an imporTimberland uses a patriotic message to underscore an emphasis tant aspect,of product quality—customers want to know that a McDonald’s on quality. hamburger is going to taste the same at any location. For many customers, a product’s versatility and its ability to satisfy their needs are central to product quality. A For other products, quality means a high degree of precision. For example, purists Six Sigma compare HDTVs in termsN of the number of pixels and their refresh rate. Quality, especially A process whereby firms work to limit product defects to 3.4 per million or fewer. in business-to-business (B2B) D products, also relates to ease of use, maintenance, and repair. Yet another crucial dimension of quality is product safety. Finally, the quality of products, R such as a painting, a movie, or even a wedding gown, relates to the degree of aesthetic E course, evaluations of aesthetic quality differ dramatically pleasure they provide. Of among people: To one person, W the quality of a mobile device may mean simplicity, ease of use, and a focus on reliability in voice signal, whereas to another it’s the cornucopia of apps and multiple communication modes available on the device. Figure 9.3 1 6 5 Degree of 4Pleasure T S Snapshot | Product Quality Some product objectives focus on quality, which is the ability of a product to satisfy customer expectations—no matter what those expectations are. Durable Product Safety Reliable Product Quality Precision Versatile Satisfies Needs Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 Ease of Use The overall ability of the product to satisfy customer expectations. C H AP T E R 9 9.2 | P R O D UC T I I : P R O D U C T STRATEG Y, BRA N D I N G , A N D PRO D U C T M A N A GEMENT 271 Marketing throughout the Product Life Cycle OBJECTIVE Many products have long lives. Others are “here today, gone tomorrow.” The product life cycle (PLC) is a useful way to explain how the market’s response to a product and marketing activities change over the life of a product. In Chapter 8, we talked about how marketers introduce new products, but the launch is only the beginning. Product (pp. 271–274) marketing strategies must evolve and change as they continue through the product life cycle. Alas, some brands don’t have long to live. Who remembers the Rambler car or Evening in Paris perfume? In contrast, other brands seem almost immortal. For example, V years, General Electric Coca-Cola has been the number-one cola brand for more than 120 has been the number-one light bulb brand for over a century, and I Kleenex has been the 16 number-one tissue brand for more than 80 years. Let’s take a look at the stages of the C PLC, which are portrayed in Figure 9.4. In addition, Figure 9.5 provides insights on marketing mix strategies throughout each phase of the PLC. K Understand how firms manage products throughout the product life cycle. E R Like people, products are born, they “grow up,” and eventually they S die. We divide the life of a product into four stages. The first stage we see in Figure 9.4 is the introduction stage. , Here, customers get the first chance to purchase the good or service. During this early product life cycle (PLC) A concept that explains how products go through four distinct stages from birth to death: introduction, growth, maturity, and decline. Introduction Stage stage, a single company usually produces the product. If it clicks and is profitable, competitors usually follow with their own versions. A During the introduction stage, the goal is to get first-time buyers to try the product. N evident in Figure 9.4, Sales (hopefully) increase at a steady but slow pace. As is also the company usually does not make a profit during this stage. D Why? Research-anddevelopment (R&D) costs and heavy spending for advertising and promotional efforts R cut into revenue. As Figure 9.5 illustrates, during the introduction stage, pricing E may be high to recover the R&D costs (demand permitting) or low to attract a large numbers ofW consumers. For example, when Microsoft’s Xbox One and Sony’s PlayStation 4 (PS4) were initially released, the PS4 had introduction stage The first stage of the product life cycle, in which slow growth follows the introduction of a new product in the marketplace. 1 $ Introduction Sales Stage and Profits No profits because the company is recovering R&D costs Growth Stage Maturity Stage Decline 6 Stage Profits increase and peak Sales peak Market shrinks: Sales4fall Snapshot | The Product Life Cycle Figure 9.4 5 The PLC helps marketers understand how a product changes over its lifetime and suggests how to modify their strategies accordingly. T S ISBN 1-323-75008-8 Sales Profit margins narrow Profits fall Profits 0 Time Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. 272 PA RT THR E E Figure 9.5 | DE V E L O P T HE VAL U E P R OPO SI TI O N F O R TH E C U STO M ER Snapshot | Marketing Mix Strategies and Other Characteristics through the Product Life Cycle Marketing mix strategies (the Four Ps) and other characteristics change as a product moves through the life cycle. Characteristic Introduction Product Goals Growth Maturity Single company produces single product New competitors enter the market creating new variations of the product New features added; sales are mostly replacement products Number of variations reduced Get first-time buyers to try the new product Encourage brand loyalty Attract new users Remain profitable; decide whether to keep or phase out product Peak, then level off, often decline Continue to decline Profit margins narrow Declining Price to maintain market share May reduce if product can remain profitable Reminder Decreased to Increase at a steady but slow pace Sales Negative Profits High: recover R&D costs Low: attract large numbers of customers Pricing Marketing Communication Informing customers V I Rapid increase C K Increase and peak E R May need to Sreduce because of increased competition, Heavy advertising to counter new competition Decline advertising maintain A profitability N D R E at $399 compared to the Xbox One’s initial price of $499. To be a substantial edge in pricing fair, these two next-generation W systems were bundled differently, but that initial difference in Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 price had a big impact on initial sales, with the PS4 taking a strong lead. It’s interesting to note that Sony had marketed the prior generation, the PS3, in two versions that were both pricey at $499 and $599, whereas the1PS2 was launched at $299. Since the initial launch of the Xbox One Microsoft has officially lowered 6 the price twice, eventually bringing the product down to $349 in the United States. To do so, Microsoft had to unbundle the Kinect, which is used for motion 5 were some tradeoffs. It remains to be seen how much this will sensor–based gaming, so there help turn around the Xbox4 console’s fortunes, or if it is too late and Microsoft will have to wait until it launches its next-generation gaming console to find a way to recoup.17 T How long does the introduction stage last? As we saw in the microwave oven example S long. A number of factors come into play, including marketin Chapter 8, it can be quite place acceptance and the producer’s willingness to support its product during start-up. Sales for hybrid cars started out pretty slowly except for the Prius, but now with broader consumer acceptance of the value of hybrid vehicles and greater levels of sales, hybrids can be considered well past the introduction stage. Now, electric cars like the Chevy Volt and the Tesla have replaced them in the introduction quadrant. It is important to note that many products never make it past the introduction stage. For a new product to succeed, consumers must first know about it. Then they must believe that it is something they want or need. Marketing during this stage often focuses on informing consumers about the product, how to use it, and its promised benefits. However, this isn’t nearly as easy as it sounds: Would you believe that the most recent data indicate that as many as 95 percent of new products introduced each year fail? | P R O D UC T I I : P R O D U C T STRATEG Y, BRA N D I N G , A N D PRO D U C T M A N A GEMENT 273 Shocking as that number is, it’s true. Ever heard of Parfum Bic, Pierre Cardin frying pans, or Jack Daniels mustard? These product blunders—which must have seemed good to some product manager at the time but sound crazy now—certainly didn’t last on shelves very long. Ever heard of the Microsoft “Kin” mobile phone, positioned as a product for teens and tweens? It was both introduced and subsequently quickly withdrawn from the market because sales were abysmal (if you have one, keep it—it could be worth a fortune as a collector’s item on eBay). It’s noteworthy that these (as are many) product failures were backed by big companies and attached to already well-known brands. Just think of the product introduction risks for start-ups and unknown brands!18 V I Growth Stage The “Snuggie” blanket was a new product success story, largely due to exceptionally C In the growth stage, sales increase rapidly while profits increase well-executed product planning and management. and peak. Marketing’s goal here is to encourage brand loyalty by K growth stage convincing the market that this brand is superior to others. In this stage, marketing strateThe second stage in the product life cycle, during E gies may include the introduction of product variations to attract market segments and which consumers accept the product and sales R rapidly increase. increase market share. Tablets and smartphones are examples of products that are still in the growth stage, as worldwide sales continue to increase. Continual S new product innovations fuel what seems for now to be an endless growth opportunity. The,iPhone 6s sold 13 million units within three days after it became available for purchase, beating out its predecessor (the iPhone 6) during that time period by 3 million units. This represented a new sales record for Apple and a sign of the continued growth opportunities within Athe smartphone market. Of course, the question over the longer term is whether Apple can keep up this momentum N given the tough competition from Samsung in the smartphone market.19 D rely on advertising When competitors appear on the scene, marketers must heavily and other forms of promotion. Price competition may develop, driving R profits down. Some firms may seek to capture a particular segment of the market by positioning their product E to appeal to a certain group. And, if it initially set the price high, the firm may now reduce W it to meet increasing competition. Maturity Stage ISBN 1-323-75008-8 1 The maturity stage of the PLC is usually the longest. Sales peak 6and then begin to level off and even decline while profit margins narrow. Competition gets intense when re5 maining competitors fight for their share of a shrinking pie. Firms may resort to price 4 today?”) to maintain reductions and reminder advertising (“Did you brush your teeth market share. T Because most customers have already accepted the product, they tend to buy to reS place a worn-out item or to take advantage of product improvements. For example, almost maturity stage The third and longest stage in the product life cycle, during which sales peak and profit margins narrow. everyone in the U.S. owns a TV (there are still more homes without indoor toilets than without a TV set), meaning that most people who buy a new set replace an older one—especially when TV stations nationwide stopped using analog signals and began to broadcast exclusively in a digital format. TV manufacturers hope that a lot of the replacements will be sets with the latest-and-greatest new technology—Samsung would love to sell you a Smart TV to replace that worn-out basic model. During the maturity stage, firms try to sell their product through as many outlets as possible because availability is crucial in a competitive market. Consumers will not go far to find one particular brand if satisfactory alternatives are close at hand. To remain competitive and maintain market share during the maturity stage, firms may tinker with the marketing mix to extend this profitable phase for their product. Food Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. Andy Cross/The Denver Post/Getty Images C H AP T E R 9 274 PA RT THR E E | DE V E L O P T HE VAL U E P R OPO SI TI O N F O R TH E C U STO M ER manufacturers constantly monitor consumer trends, which of late have been heavily skewed toward healthier eating. This has resulted in all sorts of products that trumpet their low-carb, organic, or no-trans-fat credentials. Decline Stage decline stage The final stage in the product life cycle, during which sales decrease as customer needs change. The decline stage of the PLC is characterized by a decrease in overall product category sales. The reason may be obsolescence forced by new technology—where (other than in a museum) do you see a typewriter today? See many people using flip phones recently? Although a single firm may still be profitable, the market as a whole begins to shrink, profits decline, there are fewer variations of the product, and suppliers pull out. In this stage, there are usually many competitors, but none has a distinct advantage. A firm’s major product decision in the decline stage is whether to keep the product V drains resources that the firm could use to develop newer at all. An unprofitable product products. If the firm decides I to keep the product, it may decrease advertising and other marketing communication to cut costs and reduce prices if the product can still remain C to drop the product, it can eliminate it in two ways: (1) phase profitable. If the firm decides it out by cutting production Kin stages and letting existing stocks run out or (2) simply dump the product immediately. If the established market leader anticipates that there will be some E residual demand for the product for a long time, it may make sense to keep the product on R a limited quantity of the product with little or no support from the market. The idea is to sell sales, merchandising, advertising, and distribution and just let it “wither on the vine.” S , 9.3 OBJECTIVE Branding and Packaging: A N Create Product Identity D Successful marketers keep close tabs on their products’ life cycle staExplain how branding tus, and R they plan accordingly. Equally important, though, is to give and packaging strate- that product an identity and a personality. For example, the mere word E gies contribute to Disney evokes positive emotions around fun, playfulness, family, and Wday-to-day cares out the window. Folks pay a whole lot of product identity. casting (pp. 274–283) money at Disney’s theme parks in Florida and California (as well as in France, China, and Japan) to act on those emotions. Disney achieved 1 its strong identity through decades of great branding. Branding along with packaging are extremely important (and6 expensive) elements of product strategies. 5 What’s in a Name 4 (or a Symbol)? brand A name, a term, a symbol, or any other unique element of a product that identifies one firm’s product(s) and sets it apart from the competition. Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 How do you identify your T favorite brand? By its name? By the logo (how the name appears)? By the package? By some graphic image or symbol, such as Nike’s swoosh? A S brand is a name, a term, a symbol, or any other unique element of a product that identifies one firm’s product(s) and sets it apart from the competition. Consumers easily recognize the Coca-Cola logo, the Jolly Green Giant (a trade character), and the triangular red Nabisco logo (a brand mark) in the corner of the box. Branding provides the recognition factor products need to succeed in regional, national, and international markets. A brand name is probably the most used and most recognized form of branding. Smart marketers use brand names to maintain relationships with consumers “from the cradle to the grave.” McDonald’s would like nothing better than to bring in kids for their Happy Meal and then convert them over time to its more adult Premium Grilled Chicken Ranch BLT (accompanied, they hope, by a Side Salad and a McCafé Frappé Chocolate Chip). A good brand name may position a product because it conveys a certain image (Ford Mustang, which is now more than 50 years old) or describes how it works (Drano). C H AP T E R 9 | P R O D UC T I I : P R O D U C T STRATEG Y, BRA N D I N G , A N D PRO D U C T M A N A GEMENT 275 Brand names such as Caress and Shield help position these different brands of bath soap by saying different things about the benefits they promise. Irish Spring soap provides an unerring image of freshness (can’t you just smell it now?). The recently revived Coca-Cola Company brand Surge is a carbonated beverage meant to give consumers exactly what the brand name suggests through the beverage’s caffeine and sugar content. Apple’s use of “i-everything” is a brilliant branding strategy because it conveys individuality and personalization—characteristics that Gen Y buyers prize. How does a firm select a good brand name? Good brand designers say there are four “easy” tests: easy to say, easy to spell, easy to read, and easy to remember—like P&G’s Tide, Pampers, Bold, Gain, Downy, Bounty, and Crest (P&G is probably the undisputed branding king of all time). And the name should also pass the “fit test” on four dimensions: 1. Fit the target market V 3. Fit the customer’s culture I 4. Fit legal requirements C When it comes to graphics for a brand symbol, name, or logo, K the rule is that it must be recognizable and memorable. No matter how small or large, the triangular Nabisco E logo in the corner of the box is a familiar sight. And it should have visual impact. That R in a magazine, the means that from across a store or when you quickly flip the pages brand will catch your attention. Apple’s apple with the one bite S missing never fails to attract. , A trademark is the legal term for a brand name, brand mark, or trade character. The 2. Fit the product’s benefits symbol for legal registration in the U.S. is a capital “R” in a circle: ®. Marketers register trademarks to make their use by competitors illegal. Because trademark A protection applies only in individual countries where the owner registers the brand, unauthorized use of N marks on counterfeit products is a huge headache for many companies. D registered it. In the A firm can claim protection for a brand even if it has not legally U.S., common-law protection exists if the firm has used the name R and established it over a period of time (sort of like a common-law marriage). Although a registered trademark E prevents others from using it on a similar product, it may not bar its use for a product in a completely different type of business. Consider the rangeW of unrelated “Quaker” brands: Quaker Oats (cereals), Quaker Funds (mutual funds), Quaker State (motor oil), Quaker Bonnet (gift food baskets), and Quaker Safety Products Corporation (firemen’s 1 clothing). A court applied this principle when Apple Corp., the Beatles’ music company, sued Apple Computers in 2006 over its use of the Apple logo.6The plaintiff wanted to win an injunction to prevent Apple Computer from using the Apple 5 logo in connection with its iPod and iTunes products; it argued that the application to music-related prod4 didn’t agree; he ruled ucts came too close to the Beatles’ musical products. The judge that Apple Computer clearly used the logo to refer to the download T service, not to the 20 music itself. trademark The legal term for a brand name, brand mark, or trade character; trademarks legally registered by a government obtain protection for exclusive use in that country. S ISBN 1-323-75008-8 Why Brands Matter A brand is a lot more than just the product it represents—the best brands build an emotional connection with their customers. Think about the most popular diapers—they’re branded Pampers and Luvs, not some functionally descriptive name like Absorbency Master or Dry Bottom. The point is that Pampers and Luvs evoke the joys of parenting, not the utility of the diaper. Marketers spend huge amounts of money on new product development, advertising, and promotion to develop strong brands. When they succeed, this investment creates brand equity. This term describes a brand’s value over and above the value of the generic version of the product. For example, how much extra will you pay for a shirt with the brand equity The value of a brand to an organization. Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. 276 PA RT THR E E | DE V E L O P T HE VAL U E P R OPO SI TI O N F O R TH E C U STO M ER American Eagle Outfitters logo on it than for the same shirt with no logo or, worse, the logo of an “inferior” brand? The difference reflects the eagle’s brand equity in your mind. Brand equity means that a brand enjoys customer loyalty because people believe it is superior to the competition. For a firm, brand equity provides a competitive advantage because it gives the brand the power to capture and hold on to a larger share of the market and to sell at prices with higher profit margins. For example, among pianos, the Steinway name has such powerful brand equity that its market share among concert pianists is 95 percent.21 Marketers identify different levels of loyalty (or lack thereof) by observing how customers feel about the product. At the lowest level, customers really have no loyalty to a brand, and they will change brands for any reason—often they will jump ship if they find something else at a lower price. At the other extreme, some brands command fierce devotion, and loyal users will go without rather than buy a competing brand. Escalating levels of attachment to a brand begin when consumers become aware of a V brand’s existence. Then they might look at the brand in terms of what it literally does for I them or how it performs relative to competitors. Next, they may think more deeply about the product and form beliefs and emotional reactions to it. The truly successful brands, C however, are those that truly “bond” with their customers so that people feel they have K a real relationship with the product. Here are some of the types of relationships a person E might have with a product: RThe product helps establish the user’s identity. (For example, š Self-concept attachment: do you feel better in Ralph S Lauren or Cherokee clothing?) š Nostalgic attachment: The , product serves as a link with a past self. (Does eating the inside of an Oreo cookie remind you of childhood?)22 š Interdependence: The product is a part of the user’s daily routine. (Could you get A a Starbucks coffee?) through the day without N emotional bonds of warmth, passion, or other strong emotion. š Love: The product elicits 23 (Hershey’s Kiss, anyone?) D brand meaning The beliefs and associations that a consumer has about the brand. brand storytelling Compelling stories told by marketers about brands to engage consumers. Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 Ultimately, the way R to build strong brands is to forge strong bonds with customers—bonds based on brand meaning. This concept encompasses the beliefs and asE sociations that a consumer has about the brand. In many ways, the practice of brand W the management of meanings. Brand managers, advermanagement revolves around tising agencies, package designers, name consultants, logo developers, and public relations firms are just some of the collaborators in a global industry devoted to the task of 1 meaning management. 6 Today, for many consumers brand meaning builds virally as people spread its story online. “Tell to sell,” once a mantra of top Madison Avenue ad agencies, has made a 5 comeback as marketers seek to engage consumers with compelling stories rather than 4 peddle products in hit-and-run fashion with interruptive advertising like 30-second TV commercials—which GenTY and younger largely block out anyway. The method of brand storytelling captures the notion that powerful ideas do self-propagate when the audiS ence is connected by digital technology. It conveys the constant reinvention inherent in interactivity in that whether it’s blogging, content creation through YouTube, or sharing a board on Pinterest, there will always be new and evolving perceptions and dialogues about a brand in real time. Airbnb is a great example of a company that has used brand storytelling to connect with consumers and further establish its identity. The company underwent a rebranding effort that included the changing of its brand logo to what the company calls the Bélo: the universal symbol of belonging. The symbol looks partially like an upside down heart, partially like an uppercase “A,” and includes an element that resembles the location pin symbol. For Airbnb the rebrand and accompanying branding campaign provided an opportunity to tell a story that fits with the brand’s identity, one that is centered on the experience C H AP T E R 9 | P R O D UC T I I : P R O D U C T STRATEG Y, BRA N D I N G , A N D PRO D U C T M A N A GEMENT 277 of being able to feel a sense of belonging wherever a person uses those services provided through Airbnb.24 If we could name the key elements that make a brand successful, what would they be? Here is a list of 10 characteristics of the world’s top brands:25 1. The brand excels at delivering the benefits customers truly desire. 2. The brand stays relevant. 3. The pricing strategy is based on consumers’ perceptions of value. 4. The brand is properly positioned. 5. The brand is consistent. 6. The brand portfolio and hierarchy make sense. 7. The brand makes use of and coordinates a full repertoire of marketing activities to build equity. V 9. The brand is given proper support, and that support is sustained I over the long run. 10. The company monitors sources of brand equity. C Products with strong brand equity provide exciting opportunities K for marketers. A firm may leverage a brand’s equity via brand extensions—new products it sells with the same E brand name. Because of the existing brand equity, a firm is able to sell its brand extension at R a higher price than if it had given it a new brand, and the brand extension will attract new customers immediately. Of course, if the brand extension does notSlive up to the quality or attractiveness of its namesake, there is a risk of brand dilution, in which the contrast between , the brand extension’s less positive characteristics and the more positive characteristics of the 8. The brand’s managers understand what the brand means to consumers. brand can lead to a shift in how consumers perceive the brand. Ultimately this result can impact brand equity as well as brand loyalty and sales. In the pursuit A of greater sales and market share many luxury automakers such as Audi and BMW have been using their brand N names to sell lower-end models with prices more accessible to a less affluent segment of consumers. Some marketers have voiced concerns over the impact thisD may have on the value of 26 these brands, which in the past have been heavily associated with luxury R and exclusivity. One other related approach is sub-branding, or creating a secondary brand within a E main brand that can help differentiate a product line to a desired target group. Virgin is the Wcompany. From Virgin king of sub-brands, having launched dozens over the history of the Atlantic to Virgin America, Virgin Mobile, Virgin Megastore, Virgin Wines, Virgin Radio, and on and on—founder Sir Richard Branson has shown the power of thematic threading 1 when the principal brand is robust.27 brand extensions A new product sold with the same brand name as a strong existing brand. brand dilution A reduction in the value of a brand typically driven by the introduction of a brand extension that possesses attributes that adversely contrast with the current attributes consumers associate with the brand. sub-branding Creating a secondary brand within a main brand that can help differentiate a product line to a desired target group. 6 5 Branding Strategies 4 part of product planBecause brands contribute to a marketing program’s success, a major ning is to develop and execute branding strategies. Marketers have T to determine which branding strategy approach(es) to use. Figure 9.6 illustrates the options: individual or S family brands, national or store brands, generic brands, licensing, and cobranding. This decision is critical, but it is not always an easy or obvious choice. ISBN 1-323-75008-8 Individual Brands versus Family Brands Part of developing a branding strategy is to decide whether to use a separate, unique brand for each product item—an individual brand strategy—or to market multiple items under the same brand name—a family brand or umbrella brand strategy. Individual brands may do a better job of communicating clearly and concisely what the consumer can expect from the product, whereas a well-known company likes Hyatt Hotels may find that its high brand equity and reputation in one category (e.g., Hyatt Regency at the high end) can sometimes “rub off” on a brands in newer categories like Hyatt Place and Hyatt House. family brand A brand that a group of individual products or individual brands share. Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. 278 PA RT THR E E Figure 9.6 | DE V E L O P T HE VAL U E P R OPO SI TI O N F O R TH E C U STO M ER Snapshot | Branding Strategies Individual Brands versus Family Brands Marketers have several branding strategy options to choose from. National and Store Brands Cobranding V I C K E R S , Licensing Branding Strategies Generic Brands A N D The decision whetherR to family brand often depends on characteristics of the product and whether the company’s overall product strategy calls for introduction of a single, E unique product or for the development of a group of similar products. For example, W umbrella brand for a host of diverse, individually branded Microsoft serves as a strong Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 products like Windows 10, Office 2016, Xbox One, and Bing. In contrast, Unilever and P&G prefer to brand each of their beauty care and household products separately (for most of 1 the products, you’d never know who the manufacturer is unless you look at the small print 6 on the back label). But there’s a potential 5 dark side to having too many brands, particularly when they become undifferentiated in the eyes of the consumer as a result of poor positioning, or al4 ternatively, when those brands begin to stray too far from a related parent brand, which results in a loss of synergy. T For example, The Coca-Cola Company decided to implement its “One Brand” global strategy S to address growing divisions between the various sub-brands that share the Coca-Cola name. Specifically, the strategy seeks to place Coca-Cola, Diet Coke, Coca-Cola Zero, and Coca-Cola Life more firmly under the Coca-Cola brand identity with each product’s differences framed principally in terms of their product attributes as opposed to differing brand identities. To attempt to shift perceptions in this direction, Coke took a number of actions including having all of the products share a single tagline “Taste the Feeling,” developing marketing campaigns that cover all of the different sub-brands, and in some areas, changing the packaging of each product to highlight the differences in the product while at the same time clearly showing that each one is part of the single iconic Coca-Cola brand. For Coke this reunification of the different product variants offers an opportunity to help a larger group of consumers to understand that the parent brand is more than just its flagship high-sugar product, and that there are different offerings available to C H AP T E R 9 | P R O D UC T I I : P R O D U C T STRATEG Y, BRA N D I N G , A N D PRO D U C T M A N A GEMENT 279 Coca-Cola drinkers depending on their specific product preferences and needs. The “One Brand” strategy was initially tested out on a trial basis before the company made the decision to move forward with it on a global basis.28 Retailers today often are in the driver’s seat when it comes to deciding what brands to stock and push. In addition to choosing from producers’ brands, called national or manufacturer brands, retailers decide whether to offer their own versions. Private-label brands, also called store brands, are the retail store or chain’s exclusive trade name. Costco, for example, features a fine line of more than 300 products under its own private label Kirkland Signature. Representative categories include housewares, luggage, pet food V and bedding, baby wipes, diapers, baby formula, apparel, wine, snacks, and I brands more.29 During the Great Recession that began in the late 2000s, store gained substantially in popularity for many value-conscious shoppers, C and many consumers did not switch back to the parallel national brands as the K economy rebounded because they are satisfied with the private labels. E can’t Interestingly, if a retailer stocks a unique brand that consumers find in other stores, it’s much harder for shoppers to compare R “apples to apples” across stores and simply buy the brand where they find it sold S for the lowest price. As such, private labels represent a major roadblock to Campbell’s uses a family branding strategy to identify its Chunky line , Internet of soups. price transparency online because consumers can’t easily use the to compare private label prices to national brand prices before purchase. Loblaws, Canada’s largest supermarket chain, sells more than 4,000 food national or manufacturer brands A items under the “premium quality” President’s Choice label, from cookies to beef, olive oil, Brands that the product manufacturer owns. Nfrom 30 to 40 percent of private-label brands curtains, and kitchen utensils. Sales of President’s Choice items run total store volumes. Under the private label, Loblaws can introduce D new products at high Brands that a certain retailer or distributor owns quality but for lower prices than brand names. It can also keep entire categories profitable and sells. R with its mix of pricing options. Competitors that sell only national brands can cut prices E can reduce prices on on those brands, but that hurts their overall profitability. Loblaws 30 national brands but still make money on its private-label products. W Generic Brands 1 , which is basically An alternative to either national or store branding is generic branding no branding at all. Generic branded products are typically packaged 6 in white with black lettering that names only the product itself (e.g., “Green Beans”). Generic branding is one 5 strategy to meet customers’ demand for the lowest prices on standard products such as 4 during the inflationary dog food or paper towels. Generic brands first became popular period of the 1980s when consumers became especially price conscious. More recently, T Walmart has aggressively disrupted the pharmacy business by offering some types of geS neric prescriptions, such as basic antibiotics, for $4.31 generic branding A strategy in which products are not branded and are sold at the lowest price possible. ISBN 1-323-75008-8 Licensing Some firms choose to use a licensing strategy to brand their products. This means that one firm sells another firm the right to use a legally protected brand name and other associated elements for a specific purpose and for a specific period of time. Why should an organization sell its name? Licensing can provide instant recognition and consumer interest in a new product, and this strategy can quickly position a product for a certain target market as it trades on the high recognition of the licensed brand among consumers in that segment. For example, the popular mobile phone and tablet game Angry Birds was able to become a licensee for Star Wars, which enabled Rovio, the company responsible for the game, to licensing An agreement in which one firm sells another firm the right to use a brand name for a specific purpose and for a specific period of time. Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. Courtesy of Campbell Soup Company National and Store Brands 280 PA RT THR E E | DE V E L O P T HE VAL U E P R OPO SI TI O N F O R TH E C U STO M ER Jelly Belly Candy Company create the popular Angry Birds Star Wars game. Angry Birds also has been able to license its popular brand and related characters to Hasbro to develop a line of Angry Birds’ themed toys and physical games.32 A familiar form of licensing occurs when movie producers license their properties to manufacturers of a seemingly infinite number of products. Remember how each time a blockbuster Harry Potter movie hit the screens, a plethora of Potter products packed the stores? In addition to toys and games, there was Harry Potter candy, clothing, all manner of back-to-school items, home items, and even wands and cauldrons. In 2010, with considerable fanfare, Harry and the gang showed up in the form of a major attraction at Universal Orlando called “The Wizarding World of Harry Potter.” The latest addition, called “Diagon Alley,” opened for business in the summer of 2014. Since then other “Wizarding Worlds” have opened in Los Angeles and Osaka, Japan.33 Jelly Belly cobrands with several soft drink brands to offer new flavor options. cobranding An agreement between two brands to work together to market a new product. ingredient branding A type of branding in which branded materials become “component parts” of other branded products. V I Cobranding C Frito-Lay sells Tapatío flavored potato chips (with a hint of lime). Taco Bell sells K Ranch Doritos Locos Tacos, and General Mills sells Reese’s Spicy Chicken Cool Puffs cereal. Strange E marriages? Not at all! Actually, these are examples of an innovative strategy called cobranding. Cobranding benefits both partners when R combining the two brands provides more recognition power than either enjoys S Sony markets its line of digital Cyber-shot cameras that use alone. For example, 34 Zeiss lenses, which , are world famous for their sharpness. Sony is known for its consumer electronics. Combining the best in traditional camera optics with a household name in consumer electronics helps both brands. A new and fast-growing A variation on cobranding is ingredient branding, in which branded materials become “component parts” of other branded products.35 This was the N strategy behind the classic “Intel inside” campaign, which convinced millions of consumD technical computer part (a processor) that they wouldn’t ers to ask by name for a highly otherwise recognize if they R fell over it.36 Today, consumers can buy Breyer’s Ice Cream with chunks of Snickers bars, M&M’s candies, Girl Scout Cookies Thin Mints, and several E other decadent ingredients. W branding has two main benefits. First, it attracts customers The practice of ingredient to the host brand because the ingredient brand is familiar and has a strong brand reputation for quality. Second, the ingredient brand’s firm can sell more of its product, not to 1 mention the additional revenues it gets from the licensing arrangement.37 6 5 Packages and Labels: Branding’s Little Helpers How do you know if the4soda you are drinking is “regular” or “caffeine free”? How do you keep your low-fat grated cheese fresh after you have used some of it? Why do you like T that little blue box from Tiffany’s so much? The answer to all these questions is effective Sfar, we’ve talked about how marketers create product identity packaging and labeling. So Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 package The covering or container for a product that provides product protection, facilitates product use and storage, and supplies important marketing communication. with branding. In this section, we’ll learn that packaging and labeling decisions also help to create product identity. We also talk about the strategic functions of packaging and some of the legal issues that relate to package labeling. A package is the covering or container for a product, but it’s also a way to create a competitive advantage. So the important functional value of a package is that it protects the product. For example, packaging for computers, TV sets, and stereos protects the units from damage during shipping and warehousing. Cereal, potato chips, or packs of grated cheese wouldn’t be edible for long if packaging didn’t provide protection from moisture, dust, odors, and insects. The multilayered, soft box for the chicken broth you see in Figure 9.7 prevents the ingredients inside from spoiling. In addition to protecting the product, effective packaging makes it easy for consumers to handle and store the product. C H AP T E R 9 | P R O D UC T I I : P R O D U C T STRATEG Y, BRA N D I N G , A N D PRO D U C T M A N A GEMENT 281 Metrics Moment Recall from our previous discussion that brand equity represents the value of a product with a particular brand name compared to what the value of the product would be without that brand name (think Coca-Cola versus generic supermarket soda). Companies, market research firms, and creative agencies create metrics of brand equity because this is an important way to assess whether a branding strategy has been successful. For example, The Harris Poll EquiTrend® study is conducted on an annual basis to measure the brand equity of more than 1,400 brands in more than 148 categories. The company interviews over 38,000 consumers to determine how they feel about competing brands.38 You can review the latest results at www.theharrispoll.com, then hover over “Solutions” and select “EQUITREND” from the resulting list. If consumers have strong, positive feelings about a brand and are willing to pay extra to choose it over others, marketers are on Cloud Nine. Each of the following approaches to measuring brand equity has some good points and some bad points: $ Customer mind-set metrics focus on consumer awareness, attitudes, and loyalty toward a brand. However, these metrics are based on consumer surveys and don’t usually provide a single objective measure that a marketer can use to assign a financial value to the brand. $ Product-market outcome metrics focus on the ability of a brand to charge a higher price than that of an unbranded equivalent. This V I C K E R S , usually involves asking consumers how much more they would be willing to pay for a certain brand compared to others. These measures often rely on hypothetical judgments and can be complicated to use. $ Financial market metrics consider the purchase price of a brand if it is sold or acquired. They may also include subjective judgments about the future stock price of the brand. $ A team of marketing professors proposed a simpler measure that they claim reliably tracks the value of a brand over time. Their revenue premium metric compares the revenue a brand generates with the revenue generated by a similar private-label product (that doesn’t have any brand identification). In this case, brand equity is just the difference in revenue (net price times volume) between a branded good and a corresponding private label.39 Apply the Metrics 1. Work with one or more other students to come up with a short list of five to seven of your collective favorite brands. 2. Consider the various aspects of branding you’ve read about in this chapter. What characteristics of each brand caused you to include it on your short list? A N advantage for the brand. Great packaging provides a covering for a product, and it also creates a competitive D R Recognizable E Pour spout: easy to use brand name and logo W Figure 9.7 Warnings Snapshot | Functions of Packaging 1 Product 6 benefits 5 4 Nutritional information T S Package material protects product from spoilage and is environmentally friendly Recipes for alternative uses Ingredients Toll-free number ISBN 1-323-75008-8 Directions for use UPC code Photo of actual product Photo of product in use Package shape easy to store in cabinet and refrigerator Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. 282 PA RT THR E E | DE V E L O P T HE VAL U E P R OPO SI TI O N F O R TH E C U STO M ER ZealPhotography/Alamy Stock Photo Review the different elements pointed out in Figure 9.7—collectively, they illustrate how packaging serves a number of different functions. Over and above these utilitarian functions, however, a package communicates brand personality. Effective product packaging uses colors, words, shapes, designs, and pictures to provide brand and name identification for the product. In addition, packaging provides product facts, including flavor, fragrance, directions for use, suggestions for alternative uses (e.g., recipes), safety warnings, and ingredients. Packaging may also include warranty information and a toll-free telephone number for customer service. A final communication element is the Universal Product Code (UPC), which is the set of black bars or lines printed on the side or bottom of most items sold in grocery stores and other mass-merchandising outlets. The UPC is a national system of product identification. It assigns each product a unique 10-digit number. These numbers supply specific information about the type of item (grocery item, meat, produce, V drugs, or a discount coupon), the manufacturer (a five-digit code), and the specific I product (another five-digit code). At checkout counters, electronic scanners read the UPC bars and automatically transmit data to a computer in the cash register so that C retailers can easily track sales and control inventory. QR codes are becoming commonplace on everything from cereal boxes to airline boarding passes because they hold more data and can be read by smartphones. Universal Product Code (UPC) A set of black bars or lines printed on the side or bottom of most items sold in grocery stores and other mass-merchandising outlets that correspond to a unique 10-digit number. egory. For example, when Pringles potato chips were introduced, they were deliberately packaged in a cylindrical can instead of in bags like Lay’s and others. This was A largely out of necessity because Pringles doesn’t have all the local trucks to deliver N and the cans keep the chips fresher much longer. However, to stores that Frito-Lay does, quickly after product introduction, Pringles discovered that not all customers will accept a D radical change in packaging, and retailers may be reluctant to adjust their shelf space to acR commodate such packages. To partly answer the concern, Pringles now comes in a diverse E types and sizes, including Stix, Snack Stacks, Grab & Go, array of products and package and, for the healthier eaters, WLightly Salted, Reduced Fat, Fat Free, and 100 Calorie.40 Packaging can speak to some of the intangible characteristics of a product’s brand, such as its personality, heritage, and premium image. Jim Beam recently underwent a global packaging redesign1to reflect a more premium and unified image for the products within its portfolio. Specific 6 changes meant to help unify the products under the brand included the prominent display of the Jim Beam signature “rosette” logo. In addition, to 5 keep the heritage of the brand in the minds of consumers the portraits on the side of the 4 feature seven generations of Beam family distillers, were Jim Beam White bottle, which refreshed to improve the T quality of the images. Specific Jim Beam products also had elements of the bottle updated to further communicate the premium nature of the different S product offerings within the brand. This was the first ever global packaging redesign in the 220-plus-year history of the brand! 41 Firms that wish to act in a socially responsible manner must also consider the environmental, social, and economic impact of packaging. For instance, shiny gold or silver packaging transmits an image of quality and opulence, but certain metallic inks are not biodegradable. Some firms are developing innovative sustainable packaging that involves one or more of the following: elements of the packaging that can be produced from previously used materials, elements of the packaging that use materials in their development that can be repurposed after use, the use of materials that require fewer resources to cultivate, and the use of materials and processes that are generally less harmful to the environment. Of course, there is no guarantee that consumers will accept such packaging. They didn’t take to plastic pouch refills for certain spray bottle Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 sustainable packaging Packaging that involves one or more of the following: elements of the packaging that can be produced from previously used materials, elements of the packaging that use materials in their development that can be repurposed after use, the use of materials that require fewer resources to cultivate, and the use of materials and processes that are generally less harmful to the environment. K E Design Effective Packaging Should the package have R a resealable zipper, feature an easy-to-pour spout, be compact for easy storage, be short and fat so it won’t fall over, or be tall and skinny so it won’t S take up much shelf space? Effective package design involves a multitude of decisions. , Planners must consider the packaging of other brands in the same product cat- | P R O D UC T I I : P R O D U C T STRATEG Y, BRA N D I N G , A N D PRO D U C T M A N A GEMENT 283 products even though the pouches may take up less space in landfills than the bottles do. They didn’t like pouring the refill into their old spray bottles. Still, customers have accepted smaller packages of concentrated products, such as laundry detergent, dishwashing liquid, and fabric softener. What about the shape: Square? Round? Triangular? Hourglass? Toiletry manufacturer Mennen once had an aftershave and cologne line called Millionaire that it packaged in a gold pyramid-shaped box. How about an old-fashioned apothecary jar that consumers can reuse as an attractive storage container? What color should it be? White to communicate purity? Yellow because it reminds people of lemon freshness? Brown because the flavor is chocolate? Sometimes, we can trace these decisions back to personal preferences. The familiar Campbell’s Soup label—immortalized as art by Andy Warhol—is red and white because a company executive many years ago liked the football uniforms at Cornell University! V Finally, there are many specific decisions brand managers must make to ensure I to the intended that a product’s packaging reflects well on its brand and appeals target market. What graphic information should the package show? C Someone once quipped, “Never show the dog eating the dog food.” Translation: Should there be a A range of package sizes allows a company to expand its K picture of the product on the package? Must green bean cans always show a picture product line. E of using the of green beans? Should there be a picture that demonstrates the results product, such as beautiful hair? Should there be a picture of the product in use, perhaps a R box of crackers that shows them with delicious-looking toppings arranged on a silver tray? S Should there be a recipe or coupon on the back? Of course, all these decisions rely on a marketer’s understanding of consumers, ingenuity, and perhaps a, little creative luck. Store brands have unique packaging opportunities. Some store brands opt for copycat copycat packaging Packaging designed to mimic the look of a packaging, mimicking the look of the national branded product they want to knock off. A similar or functionally identical national branded Walgreens is a master of such copycat packaging—look on any shelf in its medicinal cateproduct often meant to lead the consumer to gories, and you will see a Walgreens brand proudly merchandisedNon the shelf right next to perceive the two products as comparable. the leading national brand in that category, with the package design colors so similar D and that you have to look carefully to discern what you are actually buying.42 Nestle Dreyer’s Ice Cream Co. C H AP T E R 9 labeling in the U.S. This law aims to make labels more helpful to consumers by providing useful information. More recently, the requirements of 1 the Nutrition Labeling and Education Act of 1990 forced food marketers to make sweeping changes in how they label 6 products. Since August 18, 1994, the U.S. Food and Drug 5 Administration (FDA) requires most foods sold in the U.S. to 4 have labels telling, among other things, how much fat, saturated fat, cholesterol, calories, carbohydrates, protein, and T vitamins are in each serving of the product. These regulaS tions force marketers to be more accurate when they describe the contents of their products. Juice makers, for example, must state how much of their product is real juice rather than sugar and water. As of January 1, 2006, the FDA also requires that all food labels list the amount of trans fat in the food directly under the line for saturated fat content. The new labeling reflects scientific evidence showing that consumption of Some store brands opt for copycat packaging, mimicking the look of the national branded trans fat, saturated fat, and dietary cholesterol raises “bad” product they want to knock off. Walgreens is a master of such copycat packaging—look on cholesterol levels, which increase the risk of coronary heart any shelf in its medicinal categories and you will see a Walgreens brand proudly merchandised disease. The new information is the first significant change on the shelf right next to the leading national brand in that category, with the package design and colors so similar that you have to look carefully to discern what you are actually buying. on the Nutrition Facts panel since it was established.43 Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. Steve Hockstein/Bloomberg/Getty Images ISBN 1-323-75008-8 R Labeling Regulations E The Federal Fair Packaging and Labeling Act of 1966 controls package W communication and 284 PA RT THR E E | DE V E L O P T HE VAL U E P R OPO SI TI O N F O R TH E C U STO M ER 9.4 Organize for Effective Product Management OBJECTIVE Describe how marketers structure organizations   existing product management. (pp. 284–285) Of course, firms don’t create great products, brands, and packaging— people do. Like all elements of the marketing mix, product strategies are only as effective as their managers make them and carry them out. In this section, we talk about how firms organize both to manage existing products and to develop new products. Manage Existing Products In small firms, a single marketing manager usually handles the marketing V function. This individual is responsible for new product planning, advertising, working with the company’s few sales representatives, marketing I research, and just about everything else. But in larger firms, there are a number of managCdifferent brands, product categories, or markets. As illustrated ers who are responsible for in Figure 9.8, depending K on the organization’s needs and the market situation, product management may include brand managers, product category managers, and market manE agers. Let’s take a look at how each operates. R S Sometimes, a firm sells several or even many different brands within a single product cat, Brand Managers egory. Take the laundry section in the supermarket, for example. In the detergent category, P&G brands are Bold, Gain, and Tide. In such cases, each brand may have its own brand manager who coordinatesAall marketing activities for a brand; these duties include positioning, identifying target markets, research, distribution, sales promotion, packaging, and N evaluating the success of these decisions. D and assignment (or something similar) is still common Although this job title throughout industry, some R big firms are changing the way they allocate responsibilities. For example, today P&G’s brand managers function more like internal consultants E to cross-functional teams located in the field that have responsibility for Figure 9.8 Snapshot | Types of managing W the complete business of key retail clients across all product Product Management lines. Brand managers still are responsible for positioning of brands and Product management can take several forms: brand managers, developing and nurturing brand equity, but they also work heavily with 1 product category managers, and market managers, depending folks from sales, finance, logistics, and others to serve the needs of the maon the firm’s needs and the market situation. jor retailers6that make up the majority of P&G’s business. By its 5 very nature, the brand management system is not without potential problems. If they act independently and sometimes competitively 4 against each other, brand managers may fight for increases in short-term T own brand, potentially to the detriment of the overall prodProduct sales for their Category uct category Sfor the firm. They may push too hard with coupons, cents-off Managers Brand packages, or other price incentives to a point at which customers will refuse Managers to buy the product when it’s not “on deal.” Such behavior can hurt longterm profitability and damage brand equity. brand manager An individual who is responsible for developing and implementing the marketing plan for a single brand. Market Managers Some larger firms have such diverse product offerings that they need more extensive coordination. Take IBM, for example. Originally known as a computer manufacturer, IBM now generates much of its revenue from a wide range of consulting and related client services across the spectrum of IT applications (and the company doesn’t even sell personal computers anymore, having long ago spun off its ThinkPad business to the Chinese firm Lenovo). In cases such as IBM, organizing for product management may include Marketing: Real People, Real Choices, Ninth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Pearson. Copyright © 2018 by Pearson Education, Inc. ISBN 1-323-75008-8 Three Types of Product Management Product Category Managers C H AP T E R 9 | P R O D UC T I I : P R O D U C T STRATEG Y, BRA N D I N G , A N D PRO D U C T M A N A GEMENT product category managers, who coordinate the mix...
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Explanation & Answer

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Running head: MARKETING SURVEY

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Marketing Survey

Institution Affiliation

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MARKETING SURVEY

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Target’s Supply Chain

Target, a discount retailer has been experiencing difficult times due to the problem that is
connected to the offering various products. The most common problem that the company is
currently facing is running out of stock unexpectedly (Solomon, Marshall, & Stuart, 2017). The
management of the company has concluded that it is necessary for the company to reduce the
number of varieties and focus on a few numbers. One of the main disadvantages that are
associated with this situation is that the company will lose many customers which may lead to
the collapse of the company. The customers are likely to run away since they would prefer to go
to another shop that never runs out of stock to save time and also money as well. According to
the company’s CEO brain Cornell, the company will increase its efficiency with reduced
varieties to lay more focus (Solomon et al., 2017).
Apart from selling a variety of products, the company is also experiencing other
challenges. The challenge has been raised by the situation where the company has expanded its
grocery business (Solomon et al., 2017). The expansion has involved the introduction of
perishable goods such as meat, dairy products, and fresh products. Another challenge set in when
the company introduced customers to order through online where they would later collect the
goods from the company’s warehouse or stores. The combination of this two has led the
distribution of products to be complex or complicated.
The challenges facing this company have hindered the growth of it despite having a lofty
history of success at its heydays. The company is now faced by the decision of restructuring its
distribution chain to increase efficiency. The amount of funds that the company has set aside to
make changes is more than $5 billion (Solomon et al., 2017). The changes will involve changing
the distribution network and the technology infrastructure. These changes are expected to ensure

MARKETING SURVEY

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the company is not running out of stock and also facilitate the growth of online services. I
addition to this changes, the company is also emphasizing on reducing the number of different
products it is offering to the customers. Another change that t...


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